By DAVIS MULENGA -
LAW ENFORCEMENT agencies must swiftly investigate revelations of more than US$1 billion suspicious transactions revealed by the Financial Intelligence Centre (FIC), said Victor Nyasulu, Chief Executive Officer of Mulenji Chartered Global Management Accountants (MCGMA).
Mr Nyasulu, who is also a member of a taskforce on anti-money laundering (AML) and countering the financing of terrorism (CFT), said such transactions increased risks of tax evasion, threatening the socio-economic wellbeing of the nation.
“Law-enforcement agencies have to be more aggressive and get to the bottom of the concerns FIC has raised on increasing levels of financial crimes,” Mr Nyasulu said.
FIC is a statutory body established to provide timely, high quality, impartial and actionable financial intelligence to law-enforcement agencies and foreign designated authorities in order to eliminate financial crimes.
In its January 2017–September 2017 operational report, FIC said nearly $1 billion, translating to four per cent of Zambia’s gross domestic product (GDP), of questionable transactions had been taken in the period.
According to FIC, the fact that 50 per cent of business by State-owned enterprises and statutory bodies was given to foreign-based companies whose tax status was unclear highlighted the nation’s high vulnerability to money laundering and other financial crimes.
“It is crucial to arrest this trend as it undermines our ability in domestic resource mobilisation,” Mr Nyasulu said.
He said it was also significant that Zambia, a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), would next June undergo a peer review of its robustness in managing anti-money laundering and terrorism financing. It was last reviewed 10 years ago.
Meanwhile, the 2016 Money Laundering Terrorist Financing National Risk Assessment report said there was inadequate effectiveness in implementing legal and administrative measures by various law-enforcement agencies to combat money laundering and financing of terrorism and other illicit financial activities.
As a consequence, tax evasion threat was high due to inadequate mechanism for monitoring compliance with tax obligation. Compounding the threat was the large informal sector which was not incorporated into the formal tax system.
Drug trafficking and fraud were rated high while theft was assessed as medium.
In terms of sectoral threats, sectors comprising lawyers, accountants, real estate operators, casinos, precious metal and stones dealers and motor vehicle dealers were identified as posing a high money laundering threat.
The money laundering threat was, however, medium in the capital, insurance, pensions and other financial institutions.
The assessment also revealed that due to its vastness and surrounded by nine neighbouring countries with long land borders, Zambia was being used as a transit point by drug and human traffickers.
It was also established that the porous nature of some of the borders made it vulnerable to smuggling of consumable goods. In view of this, the money laundering threat for cross-border assessment was considered to be medium high.